An EIN, or Employer Identification Number, is essentially a Social Security number for your business. It's a nine-digit number the IRS assigns to identify your business for tax purposes, and it shows up in far more places than just filing taxes, from opening a bank account to applying for licenses.
What an EIN Is Actually Used For
Beyond filing your business's federal tax returns, an EIN is typically required to open a business bank account, apply for business credit or loans, hire employees, and set up payroll. Many vendors, especially larger ones, will also ask for it before extending business credit terms.
Even businesses that don't strictly need one for tax purposes often get one anyway, simply because so many everyday business tasks require it.
Who's Actually Required to Have One
You're required to get an EIN if you have employees, if your business is structured as a corporation or partnership, if you file certain tax returns like employment or excise taxes, or if you withhold taxes on income paid to a non-resident alien. Single-member LLCs and sole proprietors without employees aren't always required to get one and can sometimes use their Social Security number instead.
That said, using your Social Security number for business purposes means sharing it with vendors, banks, and clients far more often than most people are comfortable with, which is the main reason so many sole proprietors get an EIN anyway.
Getting One Is Free and Usually Fast
This is worth stating clearly because it trips people up: an EIN is free directly from the IRS. You apply through the IRS website, and if you're a U.S.-based applicant with a valid Social Security number or Individual Taxpayer Identification Number, you can typically get your EIN immediately online.
Third-party websites will charge a fee to "help" you get an EIN, but they're just filling out the same free IRS form on your behalf. There's rarely a reason to pay for this.
What You Need Before You Apply
To apply, you'll need your business's legal name and structure already determined, the responsible party's Social Security number or ITIN, and your business address. This is why EIN applications usually come after you've settled on your business name and, if applicable, formed your LLC or corporation, since the EIN application asks for that entity information directly.
The application itself, once you're ready, takes most people well under an hour to complete.
One EIN Per Legal Entity, Generally
Each distinct legal entity typically needs its own EIN, so if you form a second LLC for a different venture, that new entity generally needs its own separate number, even if you personally own both. A single EIN doesn't cover multiple DBAs under the same legal entity, though; those all operate under the one EIN of the underlying business.
Keep the Confirmation Letter Somewhere Safe
When you receive your EIN, the IRS sends a confirmation letter, called a CP 575. Banks, lenders, and licensing agencies will often ask to see this document specifically, not just the number itself, so keep a digital and physical copy somewhere you can find quickly. Losing it doesn't mean losing the number, but requesting a replacement letter from the IRS takes considerably longer than the original application did.
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